Control Solutions, Inc.
Industry
Electronics
Size
$90 million
Expertise
Growth Management, Operations and Cost Improvement, and Crisis Management
Assignment
The Company had experienced rapid sales growth from $5 million to $90 million over four-year time-span and was reporting anemic cash flows. This was causing hardships in everyday affairs of the business, yet a preliminary financial analysis indicated that the business was operating with an EBITDA in excess of 30%. In addition, the Company’s service levels to their major customer were poor and there was a high risk of a contractual exposure to monetary penalties and potential loss of future business for missed deliveries.
MainStream was engaged to:
Growth Management: Design the layout a new “greenfield” factory that would incorporated “World Class" and “Lean” manufacturing principles and create a transition plan to relocate the business to the new location while having no affect on customer service levels.
Operations & Cost Improvement: Review the overall business to determine causes and develop action plans to improve the poor cash flows.
Crisis Management: Develop and implement plans to mitigate all risks.
Actions
MainStream served as the Project Manager for the new “greenfield” factory developing a detailed layout for the factory, coordinating all product line moves to the new factory location, and overseeing the start-up of production at the new site. MainStream ensured the start-up at the new facility did not have any negative effect on customer service.
MainStream assisted the Company’s management in developing and implementing new material flow procedures for the new plant to manage inventory, control shortages, and improve customer service levels. This was achieved by documenting current material flow process, developing a new ideal state for inventory control processes, identifying material flow gaps, and developing action plans to fix the issues. In addition, MainStream established a formal continuous improvement program for product quality and production fall-outs. This program allowed more products to be produced with less labor and requiring fewer components to be purchased.
To address customer service issues relating to on-time delivery, MainStream developed and implemented recovery plans and performed a current products capacity and demand analysis. This analysis was completed using actual customer requirements and the plant’s daily production and shipment records. In addition, MainStream developed a daily production forecast. This forecast included monitoring actual customer requirements versus shipments and production with detailed steps for recovery when a shipment was inadequate to meet customer demands.
Results
The Company successfully relocated to a new facility without further eroding the existing customer service levels. The new plant layout, quality systems, and material flow allowed the company to improve productivity levels by approximately 50%. Increased business levels were managed without any significant increase in manpower. The Company improved its on-time customer service levels from 25% to almost 98%. New Production / Shipping / Accounting procedures eliminated lost invoicing dollars. Cash flows improved dramatically. The improved business performance allowed our client to complete a sale of the Company at a very attractive multiple.